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Gold Advances on UN-Iran Atomic Tensions; Tokyo at 21-Year High
By Jesse Riseborough
Feb. 26 (Bloomberg) -- Gold gained in Asia, trading near a nine-month high, as rising tension surrounding Iran's nuclear program spurred demand from investors seeking a haven. Tokyo gold futures reached their highest in 21 years.
The UN Security Council's five permanent members are set today to discuss possible further sanctions against the Middle East's second-biggest oil producer over the atomic issue. The metal, which often gains during times of geopolitical tension, touched $688.56 on Feb. 23, its highest since May 19.
``Given the oil price and geopolitical concerns it seems to have stepped up a level, and has already looked to test $688 before it would move on to $700,'' said Darren Heathcote, head of trading at Investec Bank (Australia) Ltd.
Gold for immediate delivery advanced as much as $5.10, or 0.8 percent, to $687.65 an ounce, and traded at $687.45 at 2:43 p.m. in Sydney. The precious metal has risen by 24 percent over the past 12 months.
Iran, which refuses to stop enriching uranium, ignored a UN Security Council Resolution ordering it to do so by Feb. 21. The country's government says that it wants to develop nuclear technology for research and to generate electricity. The U.S. has said that Iran is developing atomic weapons.
London Meeting
The five permanent Security Council members, the U.S., U.K., France, Russia, and China, plus Germany, will gather in London today for talks on a draft resolution that may impose further penalties on Iran. The UN voted unanimously on Dec. 23 to bar the country from acquiring materials or technology that might be used to build nuclear weapons.
President Mahmoud Ahmadinejad yesterday compared Iran's nuclear program to a ``train with no brakes,'' suggesting that it was unstoppable. Iran ``threw away a while ago the reverse gear and brakes,'' said the president, who was speaking at an assembly of religious leaders, according to the state-run Iranian Students News Agency.
Gold also gained on higher energy costs, which rose amid the standoff between Iran and the UN. Crude oil for April delivery rose as much as 36 cents, or 0.6 percent, to $61.50 a barrel at 2:18 p.m. Sydney time. The contract has risen for the past four straight days, trading at $61.80 on Feb. 23, its highest since Dec. 26.
``Iran's nuclear development has increased geopolitical risks in the Middle East,'' said Koji Suzuki, a senior analyst at Kazaka Commodity Co. Ltd. There are ``fears of inflation caused by rising crude oil prices.''
Weekly Survey
Gold is expected to gain this week, its eighth straight weekly advance, on the Iranian standoff, according to 20 of the 27 traders, investors and analysts surveyed by Bloomberg News from Mumbai to Chicago on Feb. 22 and Feb. 23.
Gold for April delivery rose as much as $4.70, or 0.7 percent, to $690.40 an ounce and traded at $690.10 at 2:30 p.m. Sydney time in after-hours trade on the Comex division of the New York Mercantile Exchange.
Gold futures in Tokyo rose to a 21-year high for the third straight day. Gold for delivery in December 2007 gained 33 yen, or 1.2 percent, by the midday break to 2,690 yen a gram ($692 an ounce) on the Tokyo Commodity Exchange, or Tocom.
The price of platinum also advanced to a record on Tocom. The metal for delivery in December gained as much as 73 yen, or 1.6 percent, to 4,773 yen a gram ($1,229 an ounce) at 12:44 p.m. in Tokyo, the highest since the contract started trading on the exchange on Jan. 26, 1984.
``People are pouring both dollars and yen into gold, platinum and other precious metals that are regarded as being safe assets,'' said Kazaka Commodity's Suzuki.
Lonmin Plc, the world's third largest platinum producer, said Feb. 22 it had increased the estimated time it would take to rebuild one of its smelters. A rebuild of the so-called number-one furnace is now expected to take 135 days, up from a Jan. 16 estimate of 80 days, it said.
A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net